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Human Resources Newsletter

May 2013, Issue 3

Recruitment Focus: Hiring Friends and Family

Although there are many success stories of family run businesses or two mates working together, in reality hiring and working with friends and family can be a challenge. Small businesses often complain how difficult it is to find good employees. It therefore appears to be common sense for a small business when

Continued on The Benefits of Training & Development Planning

Organisations can benefit from training and development (T&D) as it improves efficiency and productivity through flexible workers who have a broader range of knowledge and skills.

The difference between Functional and Dysfunctional Turnover

Employee turnover is the rate at which employees leave a company on an annual basis.

Does Performance Management Work?

Organisations can benefit from training and development (T&D) as it improves efficiency and productivity through flexible workers who have a broader range of knowledge and skills.

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The Benefits of Training & Development Planning

Organisations can benefit from training and development (T&D) as it improves efficiency and productivity through flexible workers who have a broader range of knowledge and skills. The best practice approach to achieving these objectives is to link T&D with the business strategy utilising the process of Plan, Do, Check, and Act. The first step of planning involves conducting a T&D needs analysis considering the needs at the organisational, task and individual levels; the creation of policies and values that support T&D, and in addition the strategy of how T&D will transform into job performance. T&D Polices are an important aspect of this stage that support learning as they are a formal means of communicating expectations, values and objectives. The next step, Do involves selecting the specific training content and how it will be delivered. Some examples of the delivery of T&D include externally for instance through registered training organisations (RTOs), or internally through on-the-job training, mentoring and technology-aided or online learning. Technology-aided or online training is becoming increasingly popular as it provides a number of benefits such as it is less expensive; allows self-paced learning; easy delivery; and it can be conducted whenever it is convenient for the employee. Despite these benefits there are some drawbacks such as becoming outdated quickly; the learner needs to be self-motivated; plus the lack of interaction with people may not favour certain learning types. The third step is Check which involves evaluating the costs of performance against the direct and indirect costs of the T&D, or in other words the return on investment (ROI). Moreover another method for measuring ROI is 360 degree feedback where the employees performance is evaluated by the employee, their supervisor, direct reports, peers and customers. The last stage in the best practice approach is Act. At this stage the organisation must be willing to make modifications to the program, or start the entire process again if the program did not achieve the objective. Conclusively that there is no single factor that is responsible for linking T&D to business strategy, the best practice approach is one which involves of continuous commitment, improvement, planning and evaluation.

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The difference between Functional and Dysfunctional Turnover

Employee turnover is the rate at which employees leave a company on an annual basis. It can be expressed as a percentage, by dividing the number of employees who have left over the year by the total number of employees who were with the firm at the beginning of the year. Employee turnover however is not a black and white situation. The biggest mistake you can make regarding employee turnover is to think about employees leaving in the same way that you think about money, i.e. Ten dollars is always ten dollars. People however arent as simple. Employees range widely in what they bring to your organisation. One person can be a superstar, another a burden, or they could be anything in-between. Dysfunctional turnover is when your best people are leaving instead of your worst performers. The opposite of this situation is when your worst performing employees are leaving, and youre retaining your best employees. This is referred to as functional turnover. Regardless in both cases, the actual rate of turnover is important to note, but it isnt as critical as whether its functional or dysfunctional.

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Dysfunctional turnover can result in both positive as well as negative outcomes for an organisation. An organisation can suffer from increased costs in hiring and firing, lost revenues as well as eroding customer relationships. Moreover, often a new employee is not as productive as established employees. In contrast, functional turnover can be beneficial when restructuring an organisation. When low performing or disruptive employees leave this may result in preventing stagnation and complacency within the organisation as well as improving the morale of the remaining employees. Below are some strategies for SMEs to adopt to keep their best employees and reduce dysfunctional turnover: Ensure that an effective recruitment strategy and system is designed to predict future performance of employees; Use realistic job previews of the role as well as the company when recruiting to increase the number of people who self-select out of the hiring process and who wouldnt be a good fit for the organisation Use of good on-boarding and induction processes to improve eventual person-job fit; Evaluate your performance management system to ascertain it motivates desired behaviours and employee performance; Lastly Retention strategies are also a good move. These could include career development opportunities, incentive compensation that rewards high performance, or innovative benefits tailored to the needs of the employee.

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Recruitment Focus: Hiring Friends and Family

(continued from Page 1) looking for trustworthy and reliable employees to hire friends and family. Regardless of the perceived ease, before diving headfirst into hiring family or friends you must first consider the advantages and disadvantages to avoid making costly decisions. Just because you get along well at home and in your personal life does not mean that you will get along equally as well once you enter into a working relationship. Often the additional time spent together can become a strain. It can be very difficult for your sibling, parent, relative, friend, or spouse to respect you as a boss, and just as difficult for you to feel comfortable about being a boss to them, regardless of how much of an equitable employer you may be. Another area to consider is how qualified the family member or friend is for the position they will hold. Just because they may be a nice or a deserving person does not make them qualified for the job. Furthermore placing an under-qualified person in a position could not only be detrimental to your company, it could be a liability too. Whats more, other employees may see the hiring as nepotism, especially if the family member is given preferential treatment or given a position without having the appropriate experience or training. As James Adonis has written in his Sydney Morning Herald blog: Organisations that allow nepotism to occur end up with a culture where no one really trusts each other. Fairness becomes inferior to favouritism. Disagreements are more likely to arise in family or friend working relationships. The key is to manage these possible disagreements starting with prevention - from the very beginning of the working arrangement. You must clearly define the relationship, roles, and responsibilities as well as the structure and hierarchy of the business from the start. Clear policies and expectations should be constructed, and each person held accountable as any other employee. Furthermore being clear from the beginning that respect is essential, and that you expect to be treated as any other employer would be, and in return you the respect will be mutable and you will be a fair employer. Working with family and friends can be a very rewarding experience. Nonetheless, at its worst it can be detrimental to business as well as to personal relationships. So before taking a recruitment shortcut by hiring family and friends, ensure that you have weighed up the pros and cons and that the person who hire for the job, will also be the best person to help your business success.
The Key Pros and Cons of Hiring Family & Friends (Wilson, A, HC Online) Pros You may not need to do a background check You have an idea of whether or not theyre lying on their resume You already know if their personality and values are likely to mesh with the organisational culture You have an idea of their reliability Their personal references are easier to verify

Cons Monetary discussions can be awkward Performance issues and terminations can be infinitely harder Friends and family may assume special privileges and take advantage of your connection Friends and family may unintentionally undermine your authority in front of other employees by not taking you seriously Entire days can be lost agonising over feelings, emotions, and issues that otherwise would not have come into play

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Does Performance Management Work?

In todays business environment the need for an efficient and effective performance management system (PMS) has increased over the last decade therefore attracting a great deal of attention in regards to their success and failure. A recent study concluded that the failure rate of PMS implementations has decreased from around 70% to 56% in the past decade and that the most severe problems that organisations encounter actually benefit from Performance Management (PM) rather than hinder it. In spite of this only a small percentage of managers and employees believe that a PMS is useful and additionally that it fails to add value to the organisation and to PM. The same study however found that CEOs believe that the flaws of a PMS lie with line managers, and not the system. Subsequently many

managers, organisations and researchers have often raised the question Does Performance Management work?. Discussed below are factors contributing to the failure of PM and PMSs. Managements lack of commitment, resistance and/or ignorance is one factor contributing to the failure of a PMS. This occurs when management view the PM process as a complicated, time consuming and cumbersome process of which they have a little of control over. In addition to these views, the reasons for the failure of PMS is because it is perceived as having no impact on performance, no connection to rewards, as well as creating potential legal challenges. Furthermore it is often the case in organisations that if a performance review

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system exists, no one is sure of how to use it. As a result PM is often viewed as a low priority by managers and therefore goal setting, coaching and evaluations are commonly completed late, rushed, incomplete or completely omitted, as a result employees rarely obtain feedback on their performance. Perceptual errors, stereotyping and personal bias of the appraiser; halo and horn effects; and first impression error also contribute to the cynical view of the accuracy of PM. These factors can, and often unintentionally, lead to ethical problems in PM involving perceived (or genuine) favouritism, inconsistencies in pay, sexual harassment and race discrimination, all of which are amongst the most difficult for organisations to resolve. Furthermore it is managers fear of these issues which often deters them from utilising a PMS to its intended potential. Goals and objectives that are incongruent or conflict with organisational objectives further enhance inaccuracy and failure of PMSs. It is often the case that many organisations create Key Performance Indicators (KPIs) and Critical Success Factors (CSFs) on an ad hoc basis with little or no connection to the different functions in an organisation as well as organisational strategic objectives. Moreover, as is often the case in the nonperformance of a PMS, the system is not regularly updated, maintained and problems fixed promptly within the system therefore eventually losing its relevance for organisations and organisational members, as it does not give them the right performance information to act upon. Subsequently the PMS becomes less relevant to the organisation as it is not aligned with changing circumstances. A last factor contributing to failure is when organisational members do not see improvements in their results, of which can be traced back to the usage of the PMS. They do

not see benefits from the system thus creating a strong inclination "to give up" on the PMS. As outlined above it is evident that a PMS can either succeed or fail dependent on certain factors owing to an organisations culture and organisational support of the PMS in regards to resources, time and effort. Two of the main issues contributing to the failure of a PMS include the lack of management commitment as well as their knowledge and education in how the system works. Furthermore the incongruity of goals to organisational objectives, an absence of a formalised process as well as the inadequate maintenance to keep the PMS current and relevant to an organisation consequently contribute towards the sceptical views maintained by organisational members and therefore reducing the effectiveness of the PMS. Accordingly a PMS will be successful when the perceived benefits that arise from PM in addition to the organisations purposes of the PMS, including managing the business better, are achieved. Moreover the factors including clear and defined goals aligned to individual employee roles and to organisational objectives as well as training and development, employee involvement, management and organisational commitment of the system, and the ease of understanding and use of the system are all contributing factors towards the success of a PMS, therefore helping Performance Management to work.